Bitcoin exchange Vircurex on brink of collapse after cyber attacks

By Danny Palmer
24 Mar 2014 View Comments
bitcoin-coin

Bitcoin exchange Vircurex is in danger of collapsing following the impact of cyber attacks launched against it last year.

The exchange announced that it will be freezing accounts associated with virtual currencies including Bitcoin (BTC), Litecoin (LTC), Feathercoin (FTC) and Terracoin (TRC), halting the possibility of withdrawals with immediate effect.

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"As you may very well be aware, we had two incidents last year that lead to a loss of a significant number of BTC, LTC, FTC, TRC," said Vircurex in a statement.

The Beijing-based virtual currency exchange used its own finances to reimburse those affected by the attacks, but it now seems Vircurex can't afford to cover any further losses without shutting down.

"We had communicated at that time that we will be covering those losses from our income, which we have done so far. We had enough coin balances in our cold wallet to upkeep our platform and the positive cashflow enabled us to gradually refill the wallets," said the exchange.

"Unfortunately we had large fund withdrawals in the last weeks which have lead to a complete depletion of our cold wallet balance and we are now facing the option of either closing the site with significant unrecoverable losses for all or to work out a solution that allows the exchange to continue to operate and gradually pay back the losses," the statement added.

As a result, Vicurex will be introducing a "Frozen Funds" balance type, which can't be transferred or withdrawn, but will be paid back to owners over time, as and when the exchange can afford to provide compensation.

The plans have been made in this way with the aim that "all users will eventually receive their funds" although no timescale has been provided.

"We believe that this is the best way forward and hope for your support and understanding," the statement concluded.

The announcement that Vircurex will be freezing virtual currency accounts comes shortly after another Bitcoin exchange, MtGox, declared itself bankrupt after losing cyber currency worth £300m.

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